Build Your SaaS

We asked Patrick Campbell (Price Intelligently) and Rob Walling (Drip) to help us with our pricing tiers.

Show Notes

Jon and Justin are probably 1-2 months away from the launch of Transistor.fm. That means we need to figure out pricing.

“In your early stage two things are essential: your customer focus, and your value metric. If you can nail these two things (even if you get everything else wrong) you’re typically fine." – Patrick Campbell

We've both worked in SaaS before, but we're trying to not pretend we know everything. We want to do this right, so we reached out to two experts this week: Patrick Campbell (from Price Intelligently) and Rob Walling (from Drip).

"I can only think of a couple ways to charge more than your competitors. First, have features that no one else has (that people are willing to pay for). Or, you can position yourself differently by saying: 'we are the podcast host for businesses.' Or, you can do high-touch sales. The sales process allows you to charge more." – Rob Walling

Show notes

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Creators & Guests

Host
Jon Buda
Co-founder of Transistor.fm
Host
Justin Jackson
Co-founder of Transistor.fm
Editor
Chris Enns
Owner of Lemon Productions
Guest
Patrick Campbell
Founder of ProfitWell
Guest
Rob Walling
Co-founder of TinySeed

What is Build Your SaaS?

Interested in building your own SaaS company? Follow the journey of Transistor.fm as they bootstrap a podcast hosting startup.

Jon:

Hey, everyone. Welcome to Build Your SaaS. This is the behind the scenes story of building a web app in 20 18. I'm John Buda, a software engineer.

Justin:

And I'm Justin Jackson. I'm a product and marketing guy. Follow along as we launch

Speaker 3:

transistor

Justin:

dotfm. Wow. Hey, John. How's it going?

Jon:

Good, Justin. How are you?

Justin:

You know It's

Jon:

been a busy week.

Justin:

Been a busy week, and, I think I just at the top of the show, I wanna say it is hard to build something on the side, while you're doing other things. Yeah. We're experiencing a little bit of that. I mean, every person's life has seasons of busyness for different reasons, but, you know, it is, it it is challenging. We really want transistor to be amazing.

Justin:

We've got customers. It's exciting. But, you know, there are certain weeks where it's like, man, we just it wow. It's Yeah. We're busy.

Jon:

Yeah. I wrote a little bit of code, and that's about it.

Speaker 4:

Mhmm. Mhmm.

Jon:

Yeah. Busy busy with life, busy with other other jobs. It's hard because you don't wanna let the momentum die. And, you know, I still think about it a lot, and I wanna work on it. It's just like a matter of sitting down and doing it.

Justin:

Yeah. Yeah. Exactly. Yeah. I think, well, we can get into some of that a bit later.

Justin:

I I wanna get right into our our main topic, and, so if you folks wanna hear more about John and I talk about how hard it is, wait wait wait till the end of the show. But we're trying

Jon:

to be After hours. The episode.

Justin:

Yeah. The after hours. Exactly. But we've been one thing we have done is we've had a lot of conversations around pricing, and we talked about this 2 weeks ago. Last week I published a little clip of my conversation with Nathan Barry around pricing and, we got a lot of feedback from listeners who said they were they really wanted to be in that initial conversation we had about pricing.

Justin:

They were like they they wanted to interject and say, hey, this is what I think. And so it was it was great getting that feedback, But we were able to speak to, Patrick Campbell from Price Intelligently. Sorry. It was just me on that call and then, we both were on a call with Rob Walling from, previously from Drip. And so I thought we would just play some of those clips and then talk about them.

Justin:

You weren't on the Patrick call, so why don't we do this first one here. Just click play on that, and we'll we'll talk about it after. So for a new company like us, what kind of process would you take us through? What were where where would you start us out?

Speaker 3:

Yeah. And I think it it's you guys were on the right track with I listened to the the episode on the pricing side. You're on the right track with it it really is that persona identification because when you're early, there's 2 things that are really, really important. Focus and your value metric. And the focus comes from who are you selling to.

Speaker 3:

And everyone's, like, oh, I wanna go to everybody. Right?

Jon:

Like, oh,

Speaker 3:

there's this big dogs that are coming in. Oh, there's a bunch of my, like, start up friends. That type of stuff.

Jon:

Mhmm.

Speaker 3:

And it's okay to take inbound from all of those folks, but, you know, you probably like, we've all read the, like, you know, click funnels and ConvertKit stories where it was, like, once they focused, all of a sudden, you know, things things took off. And that's really what's really important with pricing is that you want to figure out who is going to be the sustainable profitable customer.

Jon:

Mhmm.

Speaker 3:

And that's not only from a like, who you should target with your marketing, but it's also how are you gonna structure your pricing. Because oftentimes what happens, and this is why we gave ProfitWell away for free actually, is you do the analysis and you realize, like, oh, selling to my startup friends probably isn't that profitable.

Justin:

Mhmm.

Speaker 3:

You know, it's low CAC, but, you know, there's not a ton of them maybe. Whereas selling to a really giant corporation also might not be great because you guys might not have the DNA to to do that because you don't want to or you're like, I just don't know how to do that. Mhmm. So that's the biggest piece. That's the hardest piece because it's the most ambiguous.

Speaker 3:

Mhmm. And the other thing is just really nailing your value metric, which is what you charge for. I mean, you guys talked about that a little bit, but those are the 2 biggest things for early company. And then as you grow, a bunch of other stuff becomes more important. But if you nail those two things and you get everything else wrong, you're typically fine.

Jon:

So so, yeah, we're talking a little bit about being a premium a premium host and then covering a little bit about what our metric would be for billing.

Justin:

Yeah. And I I like Patrick's take on, he really identified it you need to focus on 2 things at first. It's your, your value metric and your personas. Right? And the, he said, you know, he he was listening to that episode.

Justin:

Actually, both Rob and Patrick had already listened to our show before I called them. They're like, yeah. We we already we already listened. And they they said, you know, we saw when you got stuck on who is this for. And I like how Patrick said, you know, everybody in the beginning, you know, wants to sell to their friends, wants to sell to people they know, when they get an opportunity for what looks like a really cool customer.

Justin:

You know, you wanna take those opportunities. But he's also saying that might not be your ideal customer. What what did you kind of think about that?

Jon:

Yeah. Yeah. I I would agree with that. I mean, yeah. I think I think, your ideal customer would be, you know, more along the lines of someone who would sign up without necessarily knowing you, for starters.

Jon:

I think we initially had this focus on a business, business, podcast.

Justin:

That what was encouraging is, you know, when we initially talked 2 weeks ago, we thought, maybe we identified, okay, we wanna have anchor around one main thing, and that was reinforced by Nathan, that was reinforced by Patrick and Rob. But we had said maybe we would do it around shows.

Jon:

Yeah. So, yeah, we we have, you know, being in a in the podcasting space, I think there's a number of value metrics you could bill on. Shows being one of them, downloads, like download bandwidth, megabytes, gigabytes Mhmm. Users, stuff like that. And, yeah, most things I've seen were were based on shows in the past.

Jon:

Yeah.

Justin:

Specifically, some of our higher end competition, they they were anchoring around shows. And I think the the reason for that is a lot of them are catering towards big broadcasters. And so, you know, if you if you Google like enterprise podcast hosting, those folks are going after, you know, the CBC and Public Radio and and folks that have, maybe Gimlet, you know, folks that have big networks or big, broadcast studios and they're looking for really enterprise grade stuff. And maybe anchoring around shows makes sense for them, but it this kinda shows you why always looking at your competition is not a good idea.

Jon:

Right.

Justin:

And so I I it was affirming that, you know, once we started hearing the same thing over and over again, like, you know what? If I was gonna do this, people said, like Nathan said, he said, I would do it around downloads per month because that Yeah. Metric kind of scales with your business. That's our main cost center is bandwidth, and it's also the the main variable that podcasters base their success on. You know, they all want more listeners, and so if we say, okay, well you get this many, you know, downloads per month in this tier, but we move you up to this tier.

Justin:

Not only are we going to help you get more listeners, but, sorry. We're the the in some ways, you're paying more to get more of what you want. Is that, I guess, what I'm trying to say.

Speaker 4:

Right.

Justin:

And, there's part of that that makes sense. Similar to web hosting, you know, I'm in the the, middle tier of WP Engine, and the the reason for that is I was getting more traffic. But for me, in my other business, more traffic means more customers, hopefully. It means, you know, more success. And so, you know, having to upgrade in some ways feels like, oh, yeah.

Justin:

I'm going pro. Right?

Jon:

Right. Yeah. Yeah. Exactly. I mean, yeah, I think some people and I I've been initially sort of opposed to the download metric because it just seems like most places are like, you get unlimited unlimited everything, for, you know, x amount of dollars a month.

Jon:

But, ultimately, downloads are the the I would say the main cost downloads and bandwidth, the main cost of a business like this. And and you're right. Like, someone starting out, you know, they might see, oh, you get x x thousands of downloads per month, and they might think that's not enough. But I think they they may figure out pretty quickly that that's actually plenty to start out. And, like, if they are above whatever the the first tier is, like, that's a huge success, and they can probably get sponsorships, and they can offset a lot of the other costs.

Justin:

Yeah. Exactly. That reminds me of what Rob said in our chat with him is, you know, he's had a lot of experience scaling, you know, like Drip collects a lot of data, so I think they had a lot of hosting costs and then they had a lot of email sending costs. And he thought when we told him that the industry standard is unlimited, he was just like, that is nuts. Right?

Jon:

Yeah.

Justin:

And, to have someone with experience kind of look forward for us and say, you could base it on that, but that's insane. Like, how are you gonna build a business Yeah. When you you know, you're and and Nathan said the same thing. Like, how are you gonna build a business when that that just doesn't make sense. Right?

Jon:

Yeah.

Justin:

So Right. Yeah. I think

Speaker 4:

Yeah. So I

Jon:

don't know I don't know when at what point we wanna get into what we're actually thinking for our pricing.

Speaker 4:

Mhmm.

Jon:

There is still a lot of things that are unlimited in that and and probably even more. A couple other things that are unlimited, they would not be unlimited if you base it on shows, if you charge per show. Yeah. So we can maybe talk about that. And then, you know, they understand that.

Justin:

Let's see. Let's go to, the the 3rd Rob Walling clip. Let's play that one.

Jon:

Yeah. Let me That sort of, eliminates another potential feature we talked about, which is, like, archiving a show. Right? So you've stopped producing it. Maybe you wanna archive it and pay less.

Jon:

That's a sort of that need goes away with this.

Speaker 4:

Yep. And I so I think

Jon:

yep. Yeah.

Speaker 4:

That's the thing. I mean, number of episodes, it shouldn't matter. Everything as soon as it's about downloads, you know, Justin, you made a point in the video in the YouTube video that I was gonna make if you and then you said it is and it comes back to drip. If you look at Infusionsoft or I think ActiveCampaign ActiveCampaign, they charge based on the number of accounts you have. Right?

Speaker 4:

So if you have these separate firewall accounts, which kind of kinda link up to websites, like each website, you should have a separate account. Mhmm. But since Drip was all about subscribers, we said unlimited accounts, and that was and unlimited users. That was early on, people were like, oh, why are you doing that? You should if people have 5 users using it, they're getting more value.

Speaker 4:

And it was like, no. No. No. People have more subscribers, they're getting more value. It allowed us to hone in on that one thing and make accounts unlimited.

Speaker 4:

You can do the same thing. You said it in the video. This means someone could bring 10 shows over.

Jon:

Mhmm.

Speaker 4:

And if all 10 shows combined do 5,000, they're only paying us 19. And that actually makes sense because those shows are really tiny. Right? But it encourages them also to bring over larger shows because they don't pay for a show. They purely that much.

Speaker 4:

I I think a lot it makes a lot of sense to do it that way.

Jon:

Yeah. I I agree that that makes a lot of sense to to base it on downloads. I think that mirrors, you know, what you were thinking last week in a video that you sent me, that you could you have the ability, let's say, to sign up for Transistor for the, you know, the first tier, and you can have as many shows as you want, but you get x thousands of downloads. Mhmm. That allows you to experiment with new shows, see which one gains traction, and and like, you know, like Rob said, like, each show itself doesn't really doesn't bring about additional support necessarily.

Jon:

There's not a lot of extra costs to come along with that. There's not much bandwidth

Speaker 4:

Mhmm.

Jon:

Aside from additional media files. Like, you know, you might have a website per show, but if you have 10 shows, like, that's still not it's still not doesn't add up to a lot.

Justin:

Yeah. And one thing we've we've already seen with some of our inbound is that, you know, like some companies want to have a public show and then they want to have a show just for their staff. And really what we want is people using Transistor more, having a great experience and then telling other people about it. And it almost feels like we're we're we're stopping people from being creative when we say, oh, but you have to pay for another show. It just puts this this artificial bit of friction between you and just creating something else.

Justin:

You don't even have listeners yet, but you're forcing me to pay more, and Right. To be able to say, you know what? You get x number of downloads for this amount of money per month, and you can start as many shows as you want. And the the, you know, you get to that that that watermark of let's say let's say our our, you know, one tier is 10,000 downloads per month. You get there and it's like, oh, sweet.

Justin:

You know, I've got all these podcasts that are, you know, engaging with people, and instead of having to pay for each one individually, I get to experience all these shows, I get to easily archive old shows. There's just something about it that feels good.

Jon:

Yeah. Yeah. Because we had we had originally thought about, well, we maybe need we need this option to archive a show for $5 a month, let's say, because you're not up, you're not updating it anymore. You're not publishing new episodes, but ever you want everything else to stick around. You want the RSS feed and the media.

Jon:

You'll still get downloads, but not as many. Mhmm. And, yeah. That becomes a lot easier when you just base it on down. Yeah.

Justin:

And we've the other the other advantage we have is we can already look at our usage. Now, it's not like we don't have a ton of data, but you know I made this little spreadsheet here and so we've mentioned this before cards against humanity is it an incredible outlier. Like, they are just way, way over our average and our median for downloads per episode and for downloads per month. The next most popular show on our platform, in terms of downloads per month is my old podcast product people, and that is an archived show. And so Yeah.

Justin:

The and theoretically, I'm still getting value and benefit from those downloads. When people listen to the show, they are re engaging with my content and with my brand and you know I'm still benefiting from that. So why shouldn't I be paying for that? It just makes sense. This is, one of the benefits of podcasting.

Justin:

It's it's what, podcasters sold advertisers on early on is that, you know, you put an ad in episode 5, well, people are going to be downloading episode 5 for years years years.

Jon:

Unless unless you're one of the newer, you know, the newer, like, dynamic ad insertion platforms.

Justin:

Yeah. Yeah. I was gonna say insert I think we

Jon:

we have opinions of those. I was

Justin:

gonna say insert cynical view about dynamic ad insertion here. Yeah.

Jon:

Yeah. So the one the one thing that that, you know, basing on downloads versus shows from from my perspective, you know, being a developer is, like, it's much easier and more accurate to track the number of shows you have Mhmm. Than it is the number of downloads. Like, we have to be if we go this route, we have to be pretty on top of analytics and and sort of filtering out false positives and

Speaker 4:

Mhmm.

Jon:

Downloads that are not actually listens. Obviously, everyone wants to have higher downloads, but, you know, some of those are not actually downloads. And we and we've, you know, we've taken taken precautions already to sort of adhere to a lot of the, the IAB guidelines, I believe, there. I forgot what that stands for again. It's like Internet audio broadcasters guidelines for measuring downloads and metrics.

Justin:

Yeah. Yeah. And in some ways, that's a good pressure. I obviously, it's easy for me to say that because I'm less in the in the week of it. Correct.

Justin:

But you you think, like, does that pressure make us better? Absolutely. Does it make us more honest? Absolutely.

Jon:

Yeah. I mean, obviously, we we would love more downloads because then people would pay us more, but we're not gonna we're not gonna falsify that information. That doesn't that doesn't benefit anyone really. So

Justin:

The the nice thing about this is we've we've often looked to WP Engine as one of our inspirations, and, they this is exactly what they do. They do, their tiers based on number of visits, I believe. And, so they have to be good about they have the same challenge. Right? They have to remove false positives.

Justin:

They have to

Jon:

Remove like bots Yeah. Like just indexing things because that that happens all the time with podcasters.

Justin:

Exactly. And so, here I'll show a little screenshot for you, John, but you can see that it's all based, yeah, it's based on visits and so I get x number of visits per month but then if I go over that so I so we've just started a new period for me. It's a brand new month and I get a 100000 visits per month and they're projecting 66,000 based on last month and I've already done 11,000 so far this month. And so, yeah, I mean, obviously, I think it's a technical challenge, but I I do especially because I've experienced this with WP Engine, it's like, oh, yeah. I'm in the next tier, you know.

Justin:

And actually, the other thing I remembered was ConvertKit. When I went into a new tier, they send me a congratulations email. And it's so funny, like, to be able to to to to be able to, you know, congratulations, you're paying us more money. But it is in some ways a an important milestone because it means that when I cross 10,000 subscribers or 15,000, theoretically, that means I'm being more effective. Right?

Justin:

I'm getting to a new place in my business and, there may be a way for us to even include that in the app like, hey, congratulations. You've reached this milestone. And, you know, let's say you go from the the first tier to the middle tier. Not only are we are so not only are you, you know, it's not like we're just going to say, well now you're paying for more listens per month, but what we also want to do in the other tiers is have a few features that are going to help you get to the next level. Right?

Justin:

So in terms of our our our product plan and our product roadmap, you know, the the beginner tier is really like, okay, how can we help and empower you to get to the next tier? And then that tier we can say, how can we help and empower you to get to the next tier? And each of these stages has different needs. Right? And so think in terms of us even figuring out like, okay, what are we gonna give to people next?

Justin:

Like, what do they need? Being able to look at folks and, you know, what they're paying us for, what the what's the value they wanna get out of this, and then being able to deliver that to them at whatever stage they're at. It's amazing how this pricing discussion kind of what do you call it? It it clarifies a lot of things. Right?

Justin:

It clarifies a lot of the vision, it feels like. Who are we targeting? You know, what kinds of things should we be offering them? How are we going to structure even our app? Right?

Justin:

Like, is it and I I think that's been helpful, even though we haven't completely decided what we're going to do. It's it's interesting. So I'm trying to think if there's any other any of these other clips we should listen to. I mean, there is so much great stuff. I am going to publish the full interview with Patrick on the Product People podcast.

Justin:

So if you folks wanna listen to the whole thing, product people dot tv. Let's listen to number 5 because I think that that will spark some 56 are actually both good, so let's listen to number 5.

Jon:

Alright.

Justin:

But it feels like early on, most of our differentiator is just gonna be marketing. We're just gonna be saying, we are the podcast host for professionals or for businesses or for, you know, branded content. And, is there anything we should be aware of with that?

Speaker 4:

No. I was gonna say that. I think that if you you know, the way to the I can only think of a couple ways to charge more than others, and it's either to have a feature no one

Jon:

else does that people are willing to pay for,

Speaker 4:

a feature or a feature set. Right? Mhmm. It's to position yourself differently and have people believe that positioning. Right?

Speaker 4:

So if you say we are the podcast host for businesses, then instantly you should have that right to charge more, and they have to believe it, or to do high touch basically, higher touch sales. Right? That's as soon as you go into higher touch sales, you can just the sales process allows you to charge more. Right? That's why Infusionsoft has and HubSpot have always done that.

Jon:

Mhmm.

Speaker 4:

So I don't think it'd be a bad idea you know, something WP Engine did from the start was take that tact of, like, this is our position is that we are just we are better. You know? And here here's the details of why, but we are for, like, industrial strength WordPress. Mhmm. And if you can you know, that's gonna be now if every way I think you probably have 20 competitors, I mean, I mean, it's a it's a pretty rough space.

Jon:

Yeah.

Speaker 4:

So you gotta figure out, are other people doing that, or does that matter to people? You know? And can you do it in a way that people believe you?

Jon:

Yeah. Yeah. What he what he ends there with is, is true. It is it is a busy space.

Justin:

I just love being able to hear these kind of old grizzled founders. Like, they don't they do not mince words.

Jon:

Yeah. They've been through it. They're like they know they know they've seen it. Yeah. It's yeah.

Jon:

Rob has a lot of he's got a lot of good advice.

Justin:

Yeah. And so I I I think there's a lot of wisdom in that too. Like, there he's basically said there's 3 ways to charge more, and you can either do it through feature set, which obviously we want to do. We but in the beginning, part of the reason we're we're, you know, able to, part of our thinking is we're just going to position ourselves as we are the service for businesses, and some people have asked me about that, but they go, well, what are you going to do different for businesses? And to tell you the truth, I think in the beginning, and WP Engine did this as well, a lot of it had to do with just the the service they were providing people, the onboarding they were providing people, the the tips and knowledge based articles they were providing for people, maybe what they were willing to do at the beginning to help you get going like, they were doing concierge migrations, so they would migrate you from your old host to your new host.

Justin:

And even in terms of, you know, what they were, they just knew what business accounts wanted and what they didn't want, what they cared about and what they didn't care about. And I think this is a lever that a lot of folks don't consider is that your positioning actually matters a lot. It's a big part of the product. So what's the big is there a huge difference between Nathan Barry's ConvertKit, which is email marketing for bloggers, and Mailchimp, which is email marketing for whatever. You know, is there a big differentiator?

Justin:

No. It's a lot of it is is the language they're speaking and having that that, spirit kind of baked in to the app, into your team culture, into your everything you write, into, you know, it it just it it gives everything a different tone and a different feel. Obviously, we want to build features that bring a lot of value to people. But early on, I think a big part of the value we're bringing to folks is we're like, we are for you. We understand the why you're doing the show.

Justin:

We understand, you know, what you want to get out of it, and we are and we are gonna help do whatever it takes to, you know, help you succeed.

Jon:

Yeah. Like like Rob said, I mean, it's it's the positioning and that's that's our position is that we will, you know, I he mentioned, maybe having some some higher touch, clients or customers where you can sort of, like, hand hold them through the process and we've already done a lot of that and that's, you know, that's a huge value to people. I think it's not just signing up for a service and then, you know, not really having anyone to talk to. You know, you've been on video calls with customers helping them through setting up their site, getting on iTunes. Yeah.

Jon:

And that's, I think people really really like that a lot.

Justin:

Let's, let's actually listen to Patrick's number 5. So he where he talks about selling more expensive plants. Let's listen to that right now. So do you think, is Hootsuite a customer of yours, by the way?

Speaker 3:

They they are as well.

Justin:

Oh, okay. Yeah. Yeah. So, I mean, I I don't wanna

Speaker 3:

I can talk about them, though. That's fine. Yeah. Yeah.

Justin:

So do is that what they're doing here? Is there they're like, okay. $19 is an acquisition play for us, and one out of every 20 of these, customers is going to jump over to this plan here. Is that is that their thought? And and then are they like and then, you know, eventually, they need, you know, 5 users or this is weird.

Justin:

Five users up to 10. Yeah. Eventually, we need to add more users, and now we have, you know, 10 different brands. Each has 10 different social profiles. We need 50 profiles.

Justin:

$500 a month, we we need this right now.

Speaker 3:

Yeah. So the the short answer is yes. Because look at what's happening with that $19 plan. You get one user. So this is really, hey, I'm using this as an alternative to buffer.

Speaker 3:

That's really what this is.

Jon:

And

Speaker 3:

then all of a sudden, hey, I'm a team, and Buffer has, like, pro plans and things like that. But all of a sudden it's like, okay, it's more serious. I'm taking it more seriously. And anyone who has 3 users who need to log in to a social media account and more than 10 social profiles, guarantee you a $100 a month is nothing to them for this.

Jon:

Mhmm.

Speaker 3:

Because that's a lot of people, you know, being involved. And so you actually have a more elegant way to really figure this out because if you do this based on number of downloads, all of a sudden it's and maybe it's, and you have some of this data, but I would do a a histogram analysis, kind of what you learned back in the day in elementary school.

Speaker 4:

Yeah.

Speaker 3:

And basically look at okay. All of my startup friends, what's what's kind of where is 90% of them in terms of number of downloads? Mhmm. So is that 3,000 downloads a month encompasses 90% of them? Meaning, they're all doing less than that.

Speaker 3:

Yeah. That number then is that limit on that $19 or that free tier, whatever it ends up being. And what I would recommend is I would recommend not doing a free tier out of the gate Yeah. Mainly because it's gonna bring a lot of noise. And right now, I think it's just the 2 of you.

Speaker 3:

Right?

Justin:

Yeah.

Speaker 3:

The most popular or excuse me, the most successful free plans that we see typically are launched 3 to 4 years into the business when you're just trying to open up the top of the funnel. Mhmm.

Speaker 4:

So

Speaker 3:

that's what Wistia did. And, but, yeah, I think you got you have a more elegant solution or opportunity than than a Hootsuite, for example, just by the nature of what you're doing and and combining right into the value that people are providing. And then you have a beautiful kind of unlimited or enterprise type situation where all of a sudden when they're over a 100000 downloads or whatever you think that number is, it might be contact us, and then that'll give you some reps so that you can kinda get over your, I just wanna sell $50 products, you know, kind of spirit Mhmm. And start to, get that confidence in asking for more money. Mhmm.

Speaker 3:

Because it's hard. I mean, it's it's hard when you're building something, and I don't know about you. I I get incredibly insecure. I'm like, oh, they're not gonna think it's as cool as, you know, I maybe think it is, and

Jon:

Yeah.

Speaker 3:

And the chart is less. But once you start thinking about their budget authority, how much value they're getting, and once you've had the confidence of making a few mistakes of charging someone half of what you probably should have Mhmm.

Gavin:

All of

Speaker 3:

a sudden, you start, you know, getting into a position where, oh, no. This is $10,000 a month. Mhmm. And you're, like, shaking when you offer it, and then they're, like, okay. That makes sense.

Speaker 3:

I don't know if it's right, like, right for us, but it's not the money. Like, they're not saying that, but that's that's the reaction that you get.

Justin:

Yeah. See, that's that's the perspective I think I need to hear more just because I haven't been in those rooms yet. All my SaaS experience has been based on selling a $100 a month plans. And actually, Rob had an interesting, perspective on this too. Basically, Hootsuite's pricing starts at $19 and then it jumps up to 99.

Justin:

And, one thing Patrick was saying is he's again reinforcing that downloads is a great metric for us because it it ties directly to the value that they're getting, and it it also, relates directly to our biggest cost center. So, you know, as they get more downloads, they are hopefully getting more value, and as they get more downloads, we are paying more, for bandwidth. The Rob, once he heard these numbers that I'm gonna give you right now, he was like, I would be very careful about what you put in that first tier and I don't know if I would have as significant a jump up from, for example, $19 to $99. So these are stats from, you know, generalized stats, from like thousands of podcasts. So this will include DIYers and hobbyists and things, but basically, 80% of all shows have less than 1100 average monthly downloads.

Justin:

So the concern and what did Patrick say? He said, look at what 90% of people would be in or something. So, if your show has more than 32100 average monthly downloads, that's better than 90% of all shows.

Jon:

Yeah.

Justin:

So that's now that might not match up with our customers, but that is where most folks are. And I think what I've seen a lot of people, especially who are starting a podcast out, their first goal is to get to a 1,000 monthly downloads. Once they hit that number, they they are, that's kind of cause for celebration. So, yeah, something for us to think about. What what Rob said was you wanna be careful, like, if you're, for example, in a $19 plan and all of a sudden you cross, let's say, it was a 1,000 downloads, but then the next it's a it's you cross a 1,000 downloads, but now you're paying $99 instead of $19.

Justin:

There's this feeling of, like, oh, wow. That's that's a really big jump. And he says, you know, he one thing he did do is he said, you know, Patrick at Price Intelligently does this really scientifically and he's got a lot of formulas he uses, and Rob really respects Patrick's work. Rob has a much more simple formula which is he says you double the price for each additional tier and then you try to 3 to 4 x the value. So using that other example, if our first plan was whatever $19 and we double it to 38 or 39 or whatever, then we would want a 3 to 4 times x the the number of downloads that they would get per month.

Justin:

And, obviously, we're gonna have to run the numbers on that. I don't know. That that to figure out Right. How how that's gonna work, but, I think there's something there that's that's, interesting, and I I like both approaches. I think Patrick is saying, you know, if you can get a get as much data as you can and figure out, okay, what is the what is the curve look like?

Justin:

And and then what Rob is saying is to start, why don't you just start with a plan that a a starter plan that seems reasonable and then double the price and 3 to 4 x the value people get out of it.

Jon:

Yeah. Yeah. I like I like that advice. I never really thought about that that way before.

Justin:

Yeah. Yeah. It was really good. It was really helpful. So we've got about 8 minutes left.

Justin:

What do you why don't we just have some kind of closing thoughts? Again, if you folks we're gonna be we're gonna be mulling over this for probably weeks.

Jon:

Yeah.

Justin:

And the the whole conversation with Patrick was particularly like, it was just really long and so helpful. The conversation with Rob was amazing too. It'd be great to use more of these clips in the future. But, John, what are some of your thoughts just kinda right now? Do you feel like we're we're getting closer to what we wanna do for pricing?

Jon:

Yeah. I think so. I think we're I think we have both agreed on and are sort of excited about the the prospect of downloads as the the, value metric. Yeah. And I think, you know, we're go ahead.

Justin:

Oh, sorry. I just wanna jump in and say one thing that I think we should do that Patrick recommended was doing, it's called a what is he called? A pricing preference survey. And basically, he says you you contact your existing customers and you say, you know, which of these would you are you most interested in? Like which of these value metrics is most important to you and which is least important to you?

Justin:

And if we based it on this, you know, this or this, you allow them to rank kind of the way they'd like to pay, and I think that could be interesting just to just to expose, like, if there's something really that we haven't seen here, and to make sure that we're on the right track. I think the the concept of, you know, a certain amount of downloads, as long as it was generous enough, and then, unlimited shows, I think that would be interesting to a lot of our customers.

Jon:

I think so. Yeah. So if I had to if

Speaker 3:

I had

Jon:

to decide on this today, it would be 3 separate plans. Mhmm.

Justin:

Probably

Jon:

each, obviously, based on downloads. I don't know what the starting point would be necessarily. And then each tier includes, obviously, a generous jump up in downloads, but also, some premium features. Mhmm. And I don't know if I don't know if the plans go up to $99 for unlimited shows and and, like, a lot of downloads.

Jon:

And then another thing that I think it was Rob that talked about was so at the top end, you have a large plan that has, you know, a fairly sizable chunk of downloads. But then after that, you meter it based on whatever every $10,000 is, like, a buck extra or $2 extra. Mhmm. Yeah. Which I thought was pretty smart because it's tough to, like, get you know, once you're in that range of, like, a massive show with a bunch of downloads, like, where do you go from from

Justin:

there? Yeah. Yeah. Exactly. No.

Justin:

I think we're we're folks are gonna be disappointed, but we're we're really aligned on that. That's that's exactly kind of what I was thinking too, and the nice thing is we're hoping to launch in about a month. Now we'll see if that if that we we just don't launch our market marketing tonight, so we're behind on that.

Jon:

Yeah. That was yeah. That was supposed to be today. Right? 2nd second

Justin:

Yeah. Yeah. We're we're we're behind on those things. But, you know, this gives us some time to really kind of hash that out, to ask some of our existing customers what they think, and and, yeah, we'll see when when we do the official launch what kind of what we end up with. But

Jon:

It seems it's just a really, like, easily understandable pricing, like, chart or whatever. Like, I think we've had some people in the past who signed up and they're like, I didn't know I didn't know another show is extra. Like, what's what's going on with my bill? Yeah. They're like, oh, yeah.

Jon:

It's not like, it's it's kinda weird to say you have whatever. It's $20 a show for unlimited everything, but at that point, like, why not have unlimited shows too? Why not offer unlimited shows for them? Yeah. Why is every show extra?

Jon:

It's

Justin:

it's Yeah. Exactly. Exactly. And actually, one thing that Nathan said that maybe I disagree with now is he was saying, you know, the more successful you are with podcasting, the less shows you're going to do and that that's true. Like I think the main thrust of that argument was was right on.

Justin:

But the more I think about business customers, the more I think exactly like what we've been saying, To unlock their creative potential, for them to think, you know what, I could use a podcast feed for this. I could use a podcast feed for you know, talking to my employees every week. I could use a podcast feed for sending investor updates. I could use a podcast feed for an audiobook. You know, there's all these ways of using podcasts that are creative and interesting and to to put this limit on what people can create just seems like, ah, but you know what, I think what they really care about, you know, if they're publishing a show to the public is how many listens do we get and, you know that that to me just makes sense, and it allows them to explore other ideas.

Justin:

They could have a show that's you know, does this and another show that is on a different topic. They're both meant to build their brand, but you know, they both pull in 5,000 downloads each a month. Well, that would that would be, you know, if that was me, I'd be ecstatic. I'd be I just doubled the number of downloads I was getting. I doubled the reach because now I've got 2 shows.

Jon:

Yeah. Or, you know, one gets one gets 8,000, one gets 1, and then you sort of say, well, we're just gonna focus on the one that gets 8,000 and try to try to blow that thing up

Justin:

Yeah. Yeah.

Jon:

To the next level.

Justin:

Exactly. Okay. So we've got, about a couple of minutes left here. One thing we might talk about in the future, we brought this topic up with Rob and you and I haven't really talked about it since, but this idea of fund strapping, raising a small initial round, that's something we might talk about in the future.

Jon:

Yeah. For, you know, for me lately, it's just been, it's been it's been hard to find a a sizable chunk of time to sit down and and write code for this because I'm, you know, busy doing that during the day, and I have obviously, I'm not gonna, you know, work on something at my full time job and I have meetings and there's been deadlines recently.

Justin:

Yeah.

Jon:

You know, I don't obviously, don't wanna let my team down and things like that. So, it's just been it's been it's been tough to, you know, find find the free time. I'm not I'm no longer like a energetic 21 year old who can stay up until 4 in the morning and wake up at 8 and go to work and feel okay. So and nor nor would I wanna do that. But

Justin:

Yeah. We mentioned that to Rob too.

Jon:

That's Yeah.

Justin:

That's one of the reasons we wanted to seek advice from other people. And maybe this is the benefit of being in your thirties. I'm closer to 40 now, but, you know, you Yeah.

Jon:

Well, yeah. I'm getting there.

Justin:

You you start to be like, you know, I don't wanna make as many mistakes. I wanna find people that have good wisdom, have, you know, smart things to say, and, maybe avoid the same mistakes they made. And, yeah, I I think one thing I've been feeling too I'm on the flip side, which is I have my own little business that I'm running, but it's so easy for me to do transistor stuff. And so, the you know, I'm neglecting my other business and, because I'm just Transistor is so exciting, and be building software again has been really exciting. I I went in and tried to update our our, was it our XML no.

Justin:

Our RSS spec the other day, just because I wanted to try it and and, you know, I wanna I I wanna get into it, you know. But there is this, you know, having to do it on the side, it's it is challenging. Now, I I don't wanna get I I also realized that the grass is always greener and so I often think about when I was writing marketing for developers on the side and I kept thinking I can't wait till I can go full time on this, you know. And then I did, and I realized, wow, like it was actually almost better when it was on the side. I I was so focused in those times I did have.

Justin:

I Yeah. You know, I almost got more work done in an hour on a weekend than I would in a normal week, you know. Because I was just like, this is the time. I gotta do it now.

Jon:

Yeah. I think I don't know who who's who talked about that. Maybe it was, like, Jason Fried or or DHH from 37 signals where they

Speaker 3:

I think maybe they talked about that

Jon:

when they do their they do their 4 day work weeks in the summer for employees and, like, people were just getting as much done, if not more, in 4 days because they were super focused and Yeah. You know, you kind of, like, kind of, like, build what you can with the time you have and Yeah. Don't don't get distracted by other things.

Justin:

Yeah. Yeah. Totally. Yeah. It's it it is challenging, and and that might be a good topic for another week.

Justin:

Let's wind this one down. Folks, if you have enjoyed this, please go to iTunes and leave us a rating and a review. It really helps. We're gonna we're gonna do our draw for the winner of the transistor t shirt. We'll probably announce that.

Justin:

I think I said we would announce it in June and so that's coming up. I'll probably go through that today. I'll just put it into one of those randomizers online and it'll randomly choose somebody. Also if you are using breaker, there's been a lot of folks leaving us comments and hearts in breaker that really appreciate that as well. And what else, John?

Justin:

Where can people find you on the web?

Jon:

On Twitter at Jonbuda, j o n b u d a. Website is johnbuda.com. That's, that's probably it.

Justin:

I'm at m I justin on Twitter and Instagram, and, our transistor Twitter is transistorfm and you can still sign up for our waiting list at transistor.fm. And one day, you will visit that, and there will be a brand new website there. It's coming soon.

Jon:

Coming soon.

Justin:

Folks, we really appreciate you listening to us. We really appreciate you being on this journey with us. If you hear the tiredness in our voices, that is real. And, yeah. It's just nice to know there's folks like you out there listening and a lot of you are in the same boat.

Justin:

So thanks for listening and we'll see you next week.